No cheer from bailed-out banks

The Treasury – and the taxpayer – are likely to be disappointed by results from RBS and Lloyds

The UK taxpayer can expect little solace this week from the two high-street banks which were bailed out to the tune of £63bn at the height of the financial crisis.

Royal Bank of Scotland (RBS) and Lloyds Banking Group will reveal their 2011 results this Thursday and Friday, but neither is likely to provide great cheer for the Treasury which is currently sitting on a loss of £16.2bn and £7.7bn respectively on its stakes in the two banks.

The results will also be the first public outing for the banks' respective chief executives since each hit the headlines for different reasons.

Stephen Hester chief executive of RBS turned down his £963,000 annual bonus after coming under heavy political and public flak. His chairman, Sir Philip Hampton, also turned down a £1.4m share bonus.

Since then, Mr Hester has come out fighting to shift the agenda away from his pay and back to his task of turning RBS around. On Thursday, he is expected to outline where he is in terms of these plans. It is likely he will tell investors that his original five-year plan, which ran to the end of 2013, is still on track but could take an extra two years to complete. He will blame the increased regulation of banks, the greater amounts of capital required, and the sluggishness of the UK economy for the delay.

Shareholders will hope for more details on how RBS will scale down its investment banking arm and at what cost – as much as £1bn in 2012 – and perhaps an update on the sale of its insurance business which has to be done next year.

UBS analysts forecast a near doubling in operating profits to £3.3bn, but a sharp rise in pre-tax losses from £413m to £2.1bn largely due to smaller profits in investment banking.

Lloyds chief executive Antonio Horta-Osorio announced last month that he wouldn't take his annual bonus – which could have been worth up to £2.4m – after he had eight weeks' sick leave because of extreme exhaustion.

He has rejigged his senior management team to reduce the lines of command which report to him and take off some of the day-to-day pressure as he concentrates on the strategic future of the bank. Investors will be hoping for an update on Project Verde, under which Lloyds is in exclusive talks to sell 632 of its branches to the Co-op Bank for some £1bn.

Friday will also be the last outing for finance director Tim Tookey, although no date has yet been confirmed for his replacement, George Culmer, to arrive from RSA Insurance.

The most recent consensus forecast for Lloyds from the City is for a loss of £4bn on a statutory basis. Last year, the equivalent figure was a small profit of £281m.

On an underlying basis and excluding one-offs such as the payment protection insurance write-off, the consensus is just below £2bn compared with a £2.2bn profit as reported last year. Bank watchers will also look with interest at the scale of levy that both banks pay to the Treasury.

Barclays came in slightly under estimates recently with a £325m charge. If RBS and Lloyds do similarly the Chancellor, George Osborne, may need to tweak the rate up again if he wants to hit his target of collecting £2.5bn a year through the levy.

Neither bank will pay a dividend to their shareholders.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Officer

Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

Accounts Payable

£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

Technical BA - Banking - Bristol - £400pd

£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice